Asset management: A risk based approach
Energy & Resources Benchmark Survey
Deloitte’s global Asset Risk Management survey aims to assess the overall maturity level of our clients’ risk based asset management activities, and help to identify new challenges, critical issues and the risks they may be facing today.
Organizations in the Energy & Resources industry are typically asset-intensive. Their daily operations depend strongly on the performance of their physical assets. As a result, these organizations strive continuously to optimize their asset performance. At the same time, they are frequently faced with aging assets, along with environmental, safety and regulatory compliancy requirements that are becoming more and more stringent, adverse weather conditions and environmental threats, emerging technologies and other challenges associated with asset ownership and operation. To add to this, there is the ongoing pressure to reduce costs in combination with shrinking budgets. This gives Asset Managers the huge challenge of allocating their scarce budget in the most optimal way to their assets.
The emerging discipline of a risk-based approach to managing assets has increased significantly in the last decade. Risk-based asset management has shown to be effective for asset-intensive systems, not necessarily by reducing risk, but by using risk to balance the operational performance of the assets against the asset life-cycle cost. Expenditure on assets is rationalized by using an assessment of what risk exposure is acceptable by the different stakeholders, maximizing overall wealth for the organization and society. For this reason, risk management has been widely incorporated into industry best practice for asset management, such as the ISO55000 series of standards.
The report summarizes the responses of approximately 40 participants worldwide covering almost all geographical regions as well as spanning all sectors of the E&R industry. The results of this survey will allow energy and resources companies to benchmark and assess their current ARM activities against industry best practice, and learn about emerging trends for risk management in the industry.
Key findings of the report are as follows:
· Risk management has become an integral part of good asset management practice
· As the levels of complexity and therefore required specialization increases, dedicated Asset Risk Managers are appointed to manage the myriad and diversity of risks to which assets are exposed.
· Companies recognize the importance of asset risk management for their organization, though only half of them measure and report the benefits
· Asset risk management is mainly used to prioritize investments
· The aging of assets is one of the main risks in the industry. Calculating residual lifetime and performing lifecycle costing analysis are used to manage the risk
· The full potential of quantitative risk assessment is not yet explored although it can bring huge benefits to an organization
· Qualitative asset data is key to mature asset risk management, though many companies still struggle with it
· IT tools which support asset risk management have low market penetration and limited integration with other IT tools